Two high balances: Pay one off or half of each?

persica9 · ‎02-08-2010

I'm waiting on my federal refund, which is about $3,000. My main goal right now (and only obstacle to the 700 club) is high utilization, so I'll be putting all of it towards debt payment.

My two highest balances, and thus the bulk of my util are:

Nordstrom Visa $2800 / 3000 CL

CitiBank Visa $2500 / 3200 CL

My main goal right now is to pay down util enough to break into the 700's, and eventually apply for an Amex charge card. But I know that in addition to overall utilization, companies consider 'high balances' on other accounts. With that in mind, would it be better for me to pay down one of the cards in full, or apply $1500 to each card so I wont appear to have 'high balances'? Of course it will still be a few months before I apply for anything and I will continue paying these down, but for now, what is the best option? BTW, interest rates on the two cards are practically the same. Thanks!

okiesean · ‎02-08-2010

This is just my opinion, but... I would payoff Nordstroms. They like seeing usage and payments and seem to be generous on CLI so perhaps paying them off might get you a decent CLI the next time your elgible. Use whats left to pay on Citibank and continue paying them as best as possible. I have heard you can get a LUV button on Citibank accounts for a CLI every 3 months but I havent heard of them being overly generous like Nordstroms. If you get a CLI it might help your score by lowering your utilization. Again just my opinion but I think your chances are better with Nordstroms getting a large CLI than with Citibank. I am sure others who have Citibank cards can chime in.

DI · ‎02-08-2010

@persica9 wrote:
I'm waiting on my federal refund, which is about $3,000. My main goal right now (and only obstacle to the 700 club) is high utilization, so I'll be putting all of it towards debt payment.

My two highest balances, and thus the bulk of my util are:

Nordstrom Visa $2800 / 3000 CL
CitiBank Visa $2500 / 3200 CL

My main goal right now is to pay down util enough to break into the 700's, and eventually apply for an Amex charge card. But I know that in addition to overall utilization, companies consider 'high balances' on other accounts. With that in mind, would it be better for me to pay down one of the cards in full, or apply $1500 to each card so I wont appear to have 'high balances'? Of course it will still be a few months before I apply for anything and I will continue paying these down, but for now, what is the best option? BTW, interest rates on the two cards are practically the same. Thanks!

Pay off Nordstrom and cut the card. Once you pay off Citi you can reorder a replacement card from Nordstrom.

persica9 · ‎02-08-2010

okiesean - thanks for the input, I hadnt thought about that. The balance has been pretty high for several months now though - any experience with Nordstrom balance chasing?

DI - out of curiosity, why would you pay off Nordstrom first?

DI · ‎02-08-2010

@persica9 wrote:
okiesean - thanks for the input, I hadnt thought about that. The balance has been pretty high for several months now though - any experience with Nordstrom balance chasing?

DI - out of curiosity, why would you pay off Nordstrom first?

Since Nordstrom is the card with the largest balance, I'm assuming that's your favorite card. And that's why I recommend cutting it. You can reward yourself by reordering a replacement after you pay off Citi. It will take discipline.

persica9 · ‎02-08-2010

haha well, it is my favorite. but i jacked it up when I was working for the company (left in may after 5 years). not much of an issue anymore, since i just avoid the store and thus the temptation altogether.

your assessment makes sense now though. thanks!

persica9 · ‎02-14-2010

UPDATE!

Just paid off the CitiBank Visa. Cant say I've ever made a $2500 payment before, but **bleep** - it felt good!! Decided to go that route only because I cut that card a long time ago (so no temptation to use in an 'emergency'). Used the extra $500 to make all my minimum payments for March and put a $200 dent in the Nordstrom balance. And now that Citi is done with, I'll have an extra $90 or so to put towards the Nord.

It feels like a tremendous weight has been lifted off my shoulders. I still have about $4000 to pay down, but my utilization just went from over 80% to about 50%. Hopefully Scorewatch will pick up on it when they update.

Just thought I'd share cuz I'm so excited!!

Jazzzy · ‎02-14-2010

@persica9 wrote:
UPDATE!

Just paid off the CitiBank Visa. Cant say I've ever made a $2500 payment before, but **bleep** - it felt good!! Decided to go that route only because I cut that card a long time ago (so no temptation to use in an 'emergency'). Used the extra $500 to make all my minimum payments for March and put a $200 dent in the Nordstrom balance. And now that Citi is done with, I'll have an extra $90 or so to put towards the Nord.
It feels like a tremendous weight has been lifted off my shoulders. I still have about $4000 to pay down, but my utilization just went from over 80% to about 50%. Hopefully Scorewatch will pick up on it when they update.

Just thought I'd share cuz I'm so excited!!

Congratulations on the pay down...it does feel good, doesn't it?

Do you have any kind of cash put away for emergencies? If not, I'd take part of the extra $90 and put it in a savings account. Put $50 a month in savings, for example, and pay the extra $40 towards Nordies.

You don't want to see an emergency such as a car repair send you back to your credit cards. It's just a thought, but it will also feel very good to have that money there when...not "if"...you need it. If you already have emergency savings, congratulations.

Anonymous · ‎02-14-2010

Way to go! I'm excited for ya - that had to be a great feeling. I would have paid the bank card down, as well - and think that was a great choice. Sweet!

persica9 · ‎02-15-2010

Good call, Lynette. I have about $500 tucked away in a account for emergencies. I'm about to finish up undergrad and I live at home, so my living costs are pretty low. I'll be off to law school next fall though and mostly living off of students loans for a bit, so the savings stash could use some beefing up. Thanks for the advice!

Just got an alert from scorewatch that EQ went up to 665. Getting there slowly but surely....